Gas prices are set to surge across Colorado this summer as a new rule from the EPA goes into effect June 1st.
The mandate from the Environmental Protection Agency requiring the use of reformulated gasoline (RFG) in Denver comes as the agency failed to approve a last minute appeal for a waiver from Colorado Gov. Jared Polis. Polis, writing to the EPA in April, argued the rule will cause prices spikes and potential shortages across the state:
“’The bold actions Colorado has taken, and continues to take, to reduce emissions from the transportation sector and move away from fossil fuels have negated any potential emissions or environmental benefit from the costly and harmful RFG mandate,’ the governor said in the April 4 letter. ‘RFG requirements threaten Colorado’s fuel supply, will raise prices, and may result in shortages at the pump.’
‘Polis told the EPA that, because Colorado has only one gasoline refinery — the Suncor refinery in Commerce City, which provides about 40% of Colorado’s gasoline — it might be necessary to truck in reformulated gasoline in large amounts from other refineries.”
RFG Mandate Will Be Environmentally Counterproductive and Raise Costs
Polis told the Denver Gazette recently the mandate may ironically worsen the very air quality issues it intends to address. Given the state’s limited refining capacity, Colorado will need to import large quantities of RFG from outside states including Texas, increasing pollution from tanker trucks and potentially encouraging consumers to seek cheaper gas outside the non-attainment area.
Adams County Commissioner Steve D’Orisio, a Democrat representing communities surrounding Colorado’s sole refinery, criticized the EPA mandate as a “symbolic gesture” in comments to the Denver Post this week:
“This is another example of people stacking on the burden in a disproportionately impacted community for the greater good, which is minimal,” O’Dorisio said. “Reformulated gas is merely a symbolic gesture at this point. This is yet another example of environmental injustice on the backs of Adams County.”
First term Rep. Yadira Caraveo (CO-8), who faces a competitive reelection campaign this fall, expressed similar concerns in an April letter to President Biden requesting a waiver:
“Colorado has limited infrastructure available to meet the demand the RFG mandate will create for the DM/NFR area. This means the RFG mandate will drive up gas prices for Coloradans across the Front Range, something the EPA has also said. […]
“The RFG mandate is out-of-date and out-of-touch with Colorado. We need to make sure we are focusing on the measures being implemented now at the state level to meet our climate goals while keeping gas prices low for Coloradans and protecting vulnerable communities.”
Thus far, the EPA has rejected pleas for a waiver, arguing federal law only permits the agency to issue an RFG waiver in the event of a supply disruption. However, Grier Bailey, executive director of the Colorado Wyoming Petroleum Marketers Association, told the Denver Post the RFG mandate increases systemic risks within Colorado’s gasoline supply chain:
“’The reality is that going to a more stringent fuel blend makes the logistics and the supply situation much more delicate,’ Bailey said.
“Most gas stations will delay selling reformulated gas as long as possible, but it will start being delivered later this week.
‘Nobody wants to sell reformulated gas because it’s way more expensive so they’re holding off until they have to,’ he said.”
An outside study commissioned by Polis also warned the EPA that Colorado will “very likely” face a supply shortage due to the rule, as the Governor recently told the Colorado Sun:
“They [the EPA] also actually didn’t reject [the waiver], they are holding it which means that if there’s a supply crisis, which our external analysis that we contracted for shows is very likely, they would presumably grant it. But in that case it’s a dollar late and a dime short, they should grant that now.”
Gov. Polis Played Key Role Bringing EPA Rule Into Effect
The new rule comes as a result of the EPA downgrading the Denver Metro/North Front Range area ozone status to “severe” in 2022, triggering the need for more expensive fuel.
While Polis has fought the mandate in recent years, the Colorado Governor played a key role in bringing the rule to fruition.
As EID previously discussed following the EPA’s 2022 announcement, the issue began years ago when Gov. Polis opted not to apply for a background ozone waiver as his predecessor, fellow Democrat Gov. John Hickenlooper had done before. Because of wind patterns and topography, wildfires and pollution from as far away as Asia is routinely trapped in the Front Range, leading to elevated ozone levels that aren’t tied to local emissions. The ozone waiver took these foreign emissions into account when determining whether or not Colorado was in compliance with federal regulations. Polis’s goal was to spur emissions reductions at home, but his decision instead sparked off a federal regulatory process that will now impose significant costs on Colorado residents.
A 2019 letter to the EPA signed by Polis stated:
“We believe that the interests of our citizens are best served by moving aggressively forward and without delay in our efforts to reduce ground level ozone concentrations in the Denver Metro/North Front Range non-attainment area.”
After the EPA downgraded front range air quality to “severe” in April 2022, Polis hailed the incoming regulatory hammer as “good news” for Colorado. However just months later, Polis formally challenged the EPA’s subsequent mandate requiring reformulated gasoline in the non-attainment area.
Are you ready for a dramatic increase in gas prices in Colorado, upwards of 60¢ more a gallon?
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Polis’s change of heart on the issue is welcome news for many consumers and Colorado’s business community, but it appears unlikely the state will be able to prevent the rule from taking effect.
Polis told the Colorado Sun earlier this month:
“You probably saw the letter I wrote, I’m very upset. We gave [the EPA] every legal way of simply saying ‘you have a 22 day or one year abeyance,’ and they didn’t do it unfortunately, so it is what it is.’”
Little Colorado Can Do to Comply with EPA Ozone Regulations
Regulators and local elected officials alike face a difficult predicament when it comes to ozone levels in Colorado, primarily because the state has limited ability to impact ozone concentrations along Colorado’s Front Range. According to the Regional Air Quality Council (RAQC), the lead air quality planning agency for the Denver area, only about 25 to 30 percent of the region’s ozone is within local control. Much of Colorado’s background ozone, by contrast, is attributable to sources outside the state and natural geographic factors.
While Polis is fighting the RFG mandate now, the Governor has also refused in recent years to seek an EPA waiver for emissions that fall outside the state’s control.
As the Colorado Oil and Gas Association explained in 2022:
“Most of our ozone — 60 percent is naturally occurring — blows in from other states and countries, or is caused by wildfires. Colorado could have gotten relief from these emissions that are outside our control, but the governor chose not to ask for that.”
Colorado Consumers Face Price Hikes During Summer Driving Season
Industry experts estimate the RFG mandate could increase prices this summer anywhere from $0.51 to $1 per gallon, with the Polis administration predicting it could increase gas prices as much as $0.60 per gallon.
While the rule technically only applies to the non-attainment area of eight counties – Jefferson, Boulder, Larimer, Denver, Douglas, Arapahoe, Adams and Weld – according to AAA, the RFG mandate will impact consumers well beyond the non-attainment area. As KRDO reports:
“Colorado’s major refiner, Suncor, is preparing to change its production processes.
‘The refiners are not going to produce one fuel for one part of the state, one fuel for another. Everybody in Colorado, including Pueblo, Colorado Springs, they’re going to have to use this more expensive fuel,’ said McKinley.”
The RFG rule, which spans June 1 to September 15, will take effect every summer beginning this year going forward, making the already busy summer driving season even more expensive.
Bottom Line: The Biden administration’s RFG mandate is a symbolic gesture that will not only worsen Front Range air quality, it threatens to create a supply crisis that will drive gas prices higher for working families across Colorado.
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